You've Observed the Following Returns on Crash-N-Burn Computer's Stock Over

question 80

Multiple Choice

You've observed the following returns on Crash-n-Burn Computer's stock over the past five years: 7 percent, 13 percent, 19 percent, −8 percent, and 15 percent. Suppose the average inflation rate over this time period was 2.6 percent and the average T-bill rate was 3.1 percent. Based on this information, what was the average nominal risk premium?

• A) 6.6 percent
• B) 6.1 percent
• C) 9.2 percent
• D) 1.2 percent
• E) 3.5 percent

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Definitions:

Culture of Poverty

A theory suggesting that poverty creates a distinct set of values, behaviors, and attitudes that perpetuate poverty across generations.

Explanation

The process of making something clear or easy to understand by describing or giving information about it.

Urban Underclass

A segment of the population that lives in urban areas and is characterized by high levels of unemployment, poverty, and social disadvantages.

Lower Class

A socioeconomic group that faces economic disadvantage, often with limited access to wealth, education, and job opportunities.